Tantalum is a rare metal used to produce micro-electronic capacitors that are found in cellphones, laptops, digital cameras and dozens of other electronic devices. It is favoured because of its high capacitance—its ability to hold and release electrical energy. Tantalum is also used in the aerospace, medical and nuclear power sectors.
At this time, major suppliers of Tantalum —Talison in Australia, Noventa in Mozambique and the US Defense Logistics Agency have either shut down their operations or exhausted their supplies. The world now depends largely on ‘unethically’ mined tantalum coming from the Democratic Republic of the Congo.
With this backdrop, Canadian-based Commerce Resource Corp. is one company trying to get a foothold in the industry. Their Blue River Project is in the developmental stage and hopes to start commercial production to supply ethically-mined primary tantalum within two to four years.
David Hodge, President and Director of Commerce talks with Sreekumar Raghavan of Commodity Online on the state of the industry and his own company’s prospects.
Commodity Online: How do you feel about the present situation in the tantalum industry as major suppliers have been closed?
David Hodge: We are at a very interesting stage in the evolution of the global tantalum industry. Within the past six months several major producers have all closed shop. There is virtually no major Western supplier of tantalum now. Currently, most of the supply that exists comes from Africa, particularly the Democratic Republic of Congo, where it is mined in unethical and inhumane ways. The United Nations has described it as ‘militarily-motivated’ production and hence it is generally not acceptable to the electronics industry.
As early as January this year, industry analysts had predicted that tantalum prices would rise in response to supply shortage? Why is it not happening?
There has been an inventory build up in the past two years and it is lying mostly with capacitor manufacturers and tantalum processors. Once these supplies are exhausted there is a good chance that there will be a rise in prices. It may be recalled that one of the major producers, just before closure, reportedly had informed their customers that they were seeking approximately an 80% increase in prices. But for us we have made all our future calculations based on current market price and with sizeable cash reserves we are confident and enthusiastic about our future prospects.
At what stage is your Blue River Project?
The Blue River project is located 10 kilometers north of the town of Blue River in British Columbia, Canada and was acquired by Commerce Resources in 1999. We are expecting to complete the scoping study for the project by fall of this year. Generally as you move a mineral exploration project from exploration to production you will follow these steps: drilling and resource definition, scoping study, prefeasibility study, final feasibility study (also known as bankable feasibility study). Once the scoping study is completed, it will enable us to complete full feasibility and permitting.
Where is the demand for tantalum coming from?
The demand is mainly driven by the emerging economies of China and India where electronic consumption and production is growing due to rising disposable incomes. Therefore, there is an opportunity for new primary tantalum producers and we are excited about moving through development towards production.
The closure of tantalum majors has created opportunities for new players like Commerce to emerge. What are the problems faced by newcomers?
Other than Commerce, there are three other companies more or less at a similar stage of development in the industry. There is Gippsland which is doing a feasibility study for their project in Egypt, Tertiary Metals with a project in Saudi Arabia, and Globe Metals & Mining which is working in Africa.
The biggest problem for the newcomers is the need to establish a new supply chain because the old chain has died down. All the tantalum processors were tied up with the two major Australian mines. It was an oligopoly. Therefore, it looks a bit scary as a new supply chain has to emerge. For example, India with a high consumption of tantalum doesn’t have a tantalum processing company. Pune, India based Seal Chemical Industries who have the capability and skills to process concentrate to pure tantalum had preliminary discussions with us. It is likely that an Indian processor could become part of the new supply chain that will emerge.
